The next contention as urged on behalf of the Respondents is
that the minutes cannot be accepted to be compromise inasmuch as the
parties were to undertake a further act of filing consent terms and
therefore, the agreement as contained in the minutes cannot be regarded
as a conclusive agreement. We do not agree. It cannot be accepted that
that the minutes cannot be accepted to be compromise inasmuch as the
parties were to undertake a further act of filing consent terms and
therefore, the agreement as contained in the minutes cannot be regarded
as a conclusive agreement. We do not agree. It cannot be accepted that
only because the parties were required to file consent terms, the basic
agreement as contained in the minutes of the meeting can be disregarded.
The filing of the consent terms was only consequence of the agreement
entered between the parties. The agreement as contained in the minutes
however remains intact and undisturbed. Its existence is surely not
dependent on the consent terms which the parties decided to file so as to
give a formal burial to the disputes. What we observe is that the
agreement was intended to ultimately end the litigation. The parties
accordingly acted upon the terms as contained in the agreement. Thus as a
consequence of all these actions as also some other understanding not
necessarily touching the dispute the parties agreeing to file consent terms
is no fetter. There is nothing wrong in this approach. The basic agreement
which is the foundation of the subsequent actions of the parties cannot bedenied by the parties. The law in this regard is well settled. The reliance in
this context on behalf of the Applicant to the decision of the Supreme Court
in the case Kollipara Sriramulu (supra) is apposite. The Supreme Court
has observed that a mere reference to a future formal contract will not
prevent a binding bargain between the parties. The observations of the
Supreme Court in paragraph 3 read thus:
“3. We proceed to consider the next question raised in these
appeals, namely whether the oral agreement was ineffective
agreement as contained in the minutes of the meeting can be disregarded.
The filing of the consent terms was only consequence of the agreement
entered between the parties. The agreement as contained in the minutes
however remains intact and undisturbed. Its existence is surely not
dependent on the consent terms which the parties decided to file so as to
give a formal burial to the disputes. What we observe is that the
agreement was intended to ultimately end the litigation. The parties
accordingly acted upon the terms as contained in the agreement. Thus as a
consequence of all these actions as also some other understanding not
necessarily touching the dispute the parties agreeing to file consent terms
is no fetter. There is nothing wrong in this approach. The basic agreement
which is the foundation of the subsequent actions of the parties cannot bedenied by the parties. The law in this regard is well settled. The reliance in
this context on behalf of the Applicant to the decision of the Supreme Court
in the case Kollipara Sriramulu (supra) is apposite. The Supreme Court
has observed that a mere reference to a future formal contract will not
prevent a binding bargain between the parties. The observations of the
Supreme Court in paragraph 3 read thus:
“3. We proceed to consider the next question raised in these
appeals, namely whether the oral agreement was ineffective
because the parties contemplated the execution of a formal
document or because the mode of payment of the purchase
money was not actually agreed upon. It was submitted on
behalf of the appellant that there was no contract because the
sale was conditional upon a regular agreement being executed
and no such agreement was executed We do not accept this
argument as correct. It is wellestablished that a mere reference
to a future formal contract will not prevent a binding bargain
between the parties. The fact that the parties refer to the
preparation of an agreement by which the terms agreed upon
are to be put in a more formal shape does not prevent the
existence of a binding contract. There are. however, cases where
the reference to a future contract is made in such terms as to
show that the parties did not intend to be bound. until a formal
contract is signed. The question depends upon the intention of
the parties and the special circumstances of each particular
case. As observed by the Lord Chancellor (Lord Cranworth) in
Ridgway v. Wharton (1) the fact of a subsequent agreement
being prepared may be evidence that the previous negotiations
did not amount to a concluded agreement, but the mere fact
that persons wish to have a formal agreement drawn up does
not establish the proposition that they cannot be bound by a
previous agreement In Von HatzfeldtWildenburg v.
Alexander(1) it was stated by Parker, J. as follows :
"It appears to be well settled by the authorities that if the
documents or letters relied on as constituting a contract
contemplate the execution of a further contract between
the parties, it is a question of construction whether the
execution of the further contact is a condition or term of
the bargain or whether it is a mere expression of the
desire of the parties as to the manner in which the
transaction already agreed to will in fact go through. In
the former case there is no enforceable contract either
because the condition is unfulfilled or because the law
does not recognize a contract to enter into a contract. In
the latter case there is a binding contract and the
reference to the more formal document may be ignored.”
document or because the mode of payment of the purchase
money was not actually agreed upon. It was submitted on
behalf of the appellant that there was no contract because the
sale was conditional upon a regular agreement being executed
and no such agreement was executed We do not accept this
argument as correct. It is wellestablished that a mere reference
to a future formal contract will not prevent a binding bargain
between the parties. The fact that the parties refer to the
preparation of an agreement by which the terms agreed upon
are to be put in a more formal shape does not prevent the
existence of a binding contract. There are. however, cases where
the reference to a future contract is made in such terms as to
show that the parties did not intend to be bound. until a formal
contract is signed. The question depends upon the intention of
the parties and the special circumstances of each particular
case. As observed by the Lord Chancellor (Lord Cranworth) in
Ridgway v. Wharton (1) the fact of a subsequent agreement
being prepared may be evidence that the previous negotiations
did not amount to a concluded agreement, but the mere fact
that persons wish to have a formal agreement drawn up does
not establish the proposition that they cannot be bound by a
previous agreement In Von HatzfeldtWildenburg v.
Alexander(1) it was stated by Parker, J. as follows :
"It appears to be well settled by the authorities that if the
documents or letters relied on as constituting a contract
contemplate the execution of a further contract between
the parties, it is a question of construction whether the
execution of the further contact is a condition or term of
the bargain or whether it is a mere expression of the
desire of the parties as to the manner in which the
transaction already agreed to will in fact go through. In
the former case there is no enforceable contract either
because the condition is unfulfilled or because the law
does not recognize a contract to enter into a contract. In
the latter case there is a binding contract and the
reference to the more formal document may be ignored.”
(emphasis supplied)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Civil Application NO. 2433 OF 2015
AND
First Appeal NO. 780 OF 2009
Mr. Manoj Pransukhlal Sagar
v
Indian Oil Corporation Ltd.
CORAM : ANOOP V. MOHTA &
G.S.KULKARNI, JJ.
CIVIL APPELLATE JURISDICTION
Civil Application NO. 2433 OF 2015
AND
First Appeal NO. 780 OF 2009
Mr. Manoj Pransukhlal Sagar
v
Indian Oil Corporation Ltd.
CORAM : ANOOP V. MOHTA &
G.S.KULKARNI, JJ.
Pronounced on : 02nd September,2016.
Citation:2016(6) ALLMR568
Citation:2016(6) ALLMR568
